Part 3. Submission Processing

Chapter 14. Notice Review

Section 2. BMF Notice Review

3.14.2  BMF Notice Review

All Official Use Only content has been replaced with ≡.

3.14.2.1  (01-01-2009)
Notice Review Overview

  1. This section provides instructions to the Notice Review function for reviewing Business Master File (BMF) and Integrated Data Retrieval System (IDRS) Computer Paragraph (CP) notices. These notices may be selected for review by either the Notice Review Processing System (NRPS) or by the IDRS Review Notice Register.

    Note:

    Notices may also be mandated for review by Treasury Inspector General for Tax Administration (TIGTA), management, policy statements, etc.

  2. This section also provides Campus personnel with exhibits of selected Master File and Campus (IDRS) generated notices.

    1. The exhibits contain a description of the pictured notices with the issuance conditions.

    Note:

    For various reasons, notice content is subject to change. Most changes are made to correct outdated information, confusing text and legislative changes.

  3. Reviews are conducted with the goal of improving both the accuracy and quality of information the IRS sends to taxpayers. See Exhibit 3.14.2-1.(Notice Review Process Flowchart) for an overview of the process.

3.14.2.1.1  (01-01-2009)
Prioritization of Work for BMF Service Centers

  1. First priority is to complete BMF and Individual Master File (IMF) Notices.

  2. Second priority is to complete BMF Refunds.

  3. Third priority is to complete IMF Refunds.

  4. Fourth priority is to complete BMF Balance.

  5. Fifth priority is to complete IMF Balance Due

    Note:

    Please consider Command Code (CC) NOREF cutoff times when reviewing notices.

  6. Finally any restricted interest notices must be worked.

3.14.2.2  (01-01-2009)
What Is Notice Review?

  1. Notice Review is the term used to describe the process that selects tax accounts with specific, pre-decided account activity occurring after notice generation, to be reviewed manually. This process allows tax examiners to analyze the account and the notice to decide if the information on the notice to be mailed is complete and represents the most current and up to date account information. Tax modules are also selected to intercept and correct possible processing errors and potential erroneous refunds.

  2. The ultimate goal of this process is to allow the Service the opportunity to change inaccurate information on the notice before mailing to reduce taxpayer inquiries, both written and by phone. The end result will give the taxpayer with the most accurate and current tax account information available at the time of mailing. The review of refund transcripts can decrease taxpayer burden and reduce the cost to the Service for recovery efforts.

  3. Notice Review employs the following to achieve its goal:

    • Quality

    • Timeliness

    • Interest Reduction

    • Effectiveness

    • Completeness

3.14.2.2.1  (01-01-2009)
Quality

  1. Notice accuracy is increased when appropriate feedback is provided to all areas that contribute to the generation of erroneous notices or refunds.

  2. An effective method must be developed to provide feedback to the responsible processing functions at a local level.

    Reminder:

    This feedback must be provided weekly during the current filing season.

  3. In order for the process to work, Notice Review Tax Examiners must be allowed time to assemble and provide feedback information to the Team Lead, who will contact the appropriate functional area.

  4. The NRPS Notice Disposition Reports are used as a feedback tool. There are two basic formats for these reports:

    1. The CP Format provides a breakdown of each notice by selection key for a given cycle.

    2. The Key Total Format provides a breakdown of each selection key by CP number for a given cycle.

  5. The Cumulative history reports show year-to-date totals for the above reports. The weekly reports only show data for those keys with current cycle activity. The history reports show data for keys that have had activity at any time during the year.

  6. The historical records are used to assist in "feedback" sessions with functional areas that cause the generation of notices.

3.14.2.2.2  (01-01-2009)
Timeliness

  1. ALL selected notices must be reviewed, corrected and timely mailed to minimize any negative impact to the taxpayer. For Notice Review, timely means ALL of the following:

    • Mailing ALL selected notices (except "refund deletes" ) on or before the Friday preceding the notice date

    • Completing ALL adjustments affecting refunds within one week of the Transaction Code (TC) 841 posting

    • Inputting adjustment actions on ALL other cases by the notice 23C Date

3.14.2.2.3  (01-01-2009)
Interest Reduction

  1. To help reduce the amount of interest IRS pays on refunds:

    1. IRS has a 45-day interest-free period (from the later of the due date or the filing date) in which to process taxpayer refunds. By law, refunds not issued within that 45-day period must include credit interest.

    2. Revisions to the process are made when necessary to review AND correct overpaid accounts without paying unnecessary interest.

  2. Reviewing, correcting, and mailing ALL notices timely allows the taxpayer the full allotted time to pay any outstanding balances. Generally a taxpayer has 21 days from the date of the notice (10 days for notice amounts of $100,000 or more) to pay the outstanding balance without incurring additional interest charges.

  3. For proper guidance when reducing, computing or discussing interest, refer to IRM 20.2 (Interest IRM).

3.14.2.2.4  (01-01-2009)
Effectiveness

  1. The review of Math Error notices helps to identify those notices that historically have high error rates. It also provides valuable feedback that is used to refine selection criteria.

3.14.2.2.5  (01-01-2009)
Completeness

  1. Reviewing the entire tax return, and ALL tax modules related to a notice or transcript selected for review can include, but is not limited to the review of:

    • Entity Module(s)

    • Outstanding Credit Balance Modules

    • Cross-reference TINs

    • Related Names

    • Freeze Conditions

    Note:

    If the tax return is either unavailable or not required to complete the review, you are still required to review all tax modules related to the notice module.

  2. This list is by no means all-inclusive. See IRM 3.14.2.4.6 (General Review Procedures), for additional guidance.

  3. The ultimate goal of Notice Review is to verify the accuracy of the information contained in all notices selected for review before mailing. All changes made to the taxpayer's account must be correct and completed before cycle close out. (There are some exceptions).

3.14.2.3  (01-01-2009)
Quality Assurance Research

  1. Information generic to all returns must be verified and compared to the CP notice as well as the information contained in the NRPS package and IDRS. Research is required to ensure that the information contained on the tax return is processed as the taxpayer intended.

  2. Some of the most common research command codes used by Notice Review can be found in IRM 3.14.2.4.7, Common Command Codes Used in Notice Review.

3.14.2.3.1  (01-01-2009)
CP Notices

  1. A Computer Paragraph (CP) Notice is a computer generated message resulting from:

    • A tax examiner entering Taxpayer Notice Codes (TPNCs) on a return

    • A Master File analysis of a taxpayer's account

    • Certain transactions posting to an account

  2. Notices can generate to:

    • Request information or payment from a taxpayer

    • Educate a taxpayer

    • Clarify an issue (i.e. explain a Math Error identified on their tax return)

  3. Most notices contain the following information:

    • Taxpayer's name

    • Address

    • Employer Identification Number (EIN) or Social Security Number (SSN) for Forms 706 and 709

    • Tax Period

    • Tax Form

    • A computer generated message

  4. Settlement Notices—Tell the taxpayer of payments due, interest and/or penalties due, math errors, or adjustments the Campus has made to the taxpayer's account. The three types of settlement notices reviewed by Notice Review are:

    1. Math Error Notices—Generate when a tax return, containing a math error, posts to the Master File. Error Resolution normally identifies the math errors. The tax module may include math, clerical, or credit errors.

    2. Non-Math Error Balance Due Notices—Generate when a return, with no math error, posts to the Master File. The tax module may include tax, credits, penalties, interest, or a combination of all four. The CP 161 is the balance due notice for all BMF forms except for Form 1065.

    3. Adjustment Notices—Generate when certain types of Data Processing (DP) or Examination adjustments post to an account. All adjustments made in Notice Review are Data Processing adjustments.

      Reminder:

      All Settlement Notices are subject to review.

  5. Information Notices—Generate when information needs to be sent to a taxpayer. Notice Review selects Informational type notices that explain credit elect and the offsetting of money to other balance due tax modules within the account. These notices are referred to as "Associated Notices" .

  6. IDRS Notices—The IDRS notices reviewed in Notice Review usually generate 3 to 5 cycles after the settlement notice if the account remains in a balance due status or no additional activity takes place on the account that would disrupt the notice cycle. These notices are sometimes referred to as "Collection Notices."

  7. Campus Notices—Generate to notify the Campus, Territory Office, or Area Office of a condition that needs further action to bring the taxpayer's Master File account into current status. This category includes Refund Transcripts, which are the only Campus notices reviewed in Notice Review.

    Note:

    For a description of all notices, see Document 6209.

3.14.2.3.2  (01-01-2009)
Notice Review Processing System (NRPS)

  1. The Notice Review Processing System (NRPS) selects Settlement notices, Adjustment notices, Associated notices and Refund Transcripts for review by analyzing data from the following sources:

    1. CP Notice Records—NRPS also uses this information to print a copy of selected notices for the review.

    2. Entity and Tax Modules—NRPS uses the Transcript Request System (TRS) to obtain data. This information is sent to each Campus exclusively for NRPS processing. NRPS prints this information in transcript format as part of the NRPS package.

    3. Return Transaction File (RTF)—NRPS extracts RTF data records for each selectable settlement notice. NRPS packages also contain printouts of this information.

    4. Pending Transactions—NRPS uses data from transactions that have not yet posted at the Campus as part of the selection criteria for certain keys.

      Pending Transactions

      Pending Transaction Sources Possible Pending Transactions
      Enterprise Computing Center at Martinsburg (ECC-MTB) Resequence File Adjustments (TC 29X/30X)
      Unidentified Remittance Files (URF) Extensions (TC 460)
      Tape Edit Program (TEP) (pipeline and corrected unpostable files) Merge Transactions (TC's 001, 011, and 04X)
      Generalized Unpostable Framework (GUF) and Current Cycle ECC-MTB Unpostable Files Credit Transfers [Document Codes (DC) 24, 34, 48, or 58 transactions]
      Excess Collection (XSC) File
      Generalized Mainline Framework (GMF) Error File All other significant (non-zero) transactions
      Reject File  

3.14.2.3.3  (01-01-2009)
Notice Selection Process

  1. Notices are selected based on established selection criteria. These criteria are divided into categories. Each Category contains a list of Keys that have been assigned specific selection criteria. The Categories were established to separate notice types and help establish a priority of review. Notices are selected in Category order as follows:

    • Category A — Special Handling Required

    • Category B — High Priority Selection—Local Selection

    • Category C — Federal Tax Deposit (FTD) Rollover

    • Category D — Balance Due and Even Balance Notices

    • Category E — Overpaid Notices

    • Category F — Adjustment Notices

    • Category G — Refund Transcripts

    • Category H — Low Priority Local Selection

    • Category I — Balance Due Low Priority

  2. Within each category the notice is analyzed in sequence by selection priority. Once a notice meets the criteria for a key within a category, the remaining Selection Keys in that category are bypassed and the analysis continues through the remaining categories. If the notice meets selection criteria in another category, it is assigned a secondary Selection Key; all remaining categories are bypassed, and analysis stops. (Analysis is limited to one primary and one secondary Selection Key).

  3. The selection process continues from category to category in alphabetical order. When completed, the process will result in one of the following conditions:

    1. All selection criteria were applied to the notice, but the notice was not selected for review.

    2. The notice was selected for review meeting only one selection criteria.

    3. The notice was selected for review meeting two selection criteria.

  4. During the selection process:

    1. The first selection criteria causing a notice to be selected for review is named the Primary Selection Key.

    2. The second (if applicable) selection reason is named the Secondary Selection Key.

    3. Once a Secondary Selection Key is assigned to the notice, the selection process is terminated.

    4. Any remaining selection criteria both within the Category or in remaining Categories is bypassed.

  5. Selection Criteria—The NRPS selection criteria is only applied to selectable notices and transcripts.

    1. The selection criteria is divided into categories containing similar conditions or notice types.

    2. Each category is assigned a priority based on the importance of the selection criteria within the category.

    3. Each selection criteria is assigned a two-digit numerical selection key and a numerical priority.

    4. The selection criteria is applied against the notice in ascending priority order until either the notice is selected for review or the selection criteria for the category is exhausted.

    5. If the notice is selected for review, the remaining selection criteria for the category is not applied against the notice.

      Note:

      A numerical group number is assigned during the selection analysis, and is used to sort and batch the NRPS packages. The group number is decided by the priority of the review and is used to incorporate similar selections together.

  6. The selection process requires the following:

    1. Entity and Tax Modules—The Transcript Request System provides Master File data for use in the analysis process. This data is separated from other Master File data then shipped to each Campus for use by NRPS processing and displayed in transcript format as part of the NRPS package.

    2. Transcribed Tax Return Data—an RTF data record is extracted for each settlement notice subject to NRPS selection. This data is used in the selection process and included in the NRPS package for selected notices.

  7. The selection process requires in-house transactions—certain transactions which have not posted to the Master File by the notice cycle are required by NRPS processing, they include:

    • Adjustments (TC 29X) (TC 30X)

    • Credit Transfers (Document Codes 24, 34, 48, and 58)

    • Merge Transactions (TC's 001, 011, 04X)

    • Extensions of Time to File (TC 460)

    • Any transactions with non-zero transaction amounts

  8. The transactions listed above are extracted from the following files:

    • ECC-MTB Resequence

    • Unpostables (current cycle at ECC-MTB and GUF)

    • TEP (all pipeline transactions)

    • Unidentified Remittance File

    • Excess Collections (XSC)

    • GUF Error

    • Rejects—Transaction failed Campus validity check

    • FTD File

  9. Notice Data—All selected notices are displayed in the NRPS package.

  10. The NRPS package will include all current cycle notices, selected/associated notices and/or refund transcripts.

  11. A contents sheet will be included with each package, and will provide the following information:

    • Selected notice

    • Selection Key and literal key description

    • Pending transactions

    • Documents requested

    • Other (non-selected) notices

  12. A NRPS batch consists of the following:

    • NRPS Batching Sheet—Identifies the beginning of each batch

    • NRPS Packages—1 to 20 notices per batch

    • NRPS Selection List—A list of the notices contained within the batch

  13. Manual Intervention List—Lists, in notice sequence number order, all notices that were not selected for review but require manual intervention for any of the following conditions:

    1. Central Authorization File (CAF) Mismatch-Central Authorization File name/address information to be added.

    2. Reporting Agent File (RAF) Mismatch-Reporting Agent File name/address information to be added for Forms 940, 941, 944, and 945.

  14. NRPS Batch Control Sheet—Contains a line for each batch (Notice Review copy) or a line for each batch with a document request (Files copy). It is also used as an assignment control document.

3.14.2.3.4  (01-01-2009)
Selection Keys

  1. NRPS Selection Keys. See Exhibit 3.14.2-45. (NRPS Selection Keys).

    Note:

    For detailed information on the Local Control File, see IRM3.25.78.0. For detailed information on the Notice Review Processing system, See PRP 160 Section 54. Valid percentages for Local Control File: 1%, 10%, 25%, 33%, 50%, 75%, and 100%.

3.14.2.3.5  (01-01-2009)
Output Files

  1. After NRPS completes the selection process, it combines all of the selection information into "NRPS batches." A NRPS Batch consists of the following:

    • NRPS Batching Sheet

    • NRPS Packages

    • NRPS Selection List

  2. NRPS are viewed using Control D Personal Computer (PC). Refer to the On-line Notice Review (OLNR) User Guide and Job Aid for additional information.

    Note:

    In 2005, a decision was made to convert to Web based Control —D access. Once the conversion takes place, Control D PC will no longer be used.

  3. NRPS produces several additional types of output:

    • NRPS Batch Control Sheet

    • NRPS Document Charge-Out

    • NRPS Batch Return Request List

    • Manual Intervention List

    • NRPS Selection Report

    • NRPS Non-package Selection List

    • NRPS Duplicate Selection List

    • NRPS Associated Notice Listing

      Note:

      A description of each of these is in IRM 3.14.2.3.9(Other Output).

  4. All of the above print-outs generate from the following output files:

    Listing of Output Files

    File Name Description
    NOT 1320/P Notice [Quick (Q) Print] Listing
    NOT 1330 NRPS Selection
    NOT 3260 Notice List
    NOT 3431 Back-end Notices
    NOT 3440 Back-end Notices
    NOT 3445 Back-end Assistant Commissioner International (ACI) Notices - Ogden Service Center (OSC)
    NOT 3446 Back-end ACI CP 220 (OSC)
    NOT 3480 Back-end Routing & Stuffer
    NOT 394/AG Redesign Notices (CP 101, 102, 103, 104, 105, 106, 107, 110, 111, 112, 113, 114, 115, 116, 117, 118, 123, 124, 125, 128, 134 R/B, 138, 145, 161,162, 169, 173, 210, 215, 220, 225, 260, 267, 268)
    NOT 3135 CP 297 & CP 297A Selected Certified Mail Listing
    NRP 1410/20 NRPS Selected & Associated Report
    NRP97 Command Code used to update, add, delete or change requested NRPS Packages
    NRP 9841 Electronic Output Network System (EONS) Local Control File
    NORI — B (EONS) NOREF Tape
    NOR0 142 (EONS) Refund Intercept
    1603D12 (EONS) NRP CP Totals

3.14.2.3.6  (01-01-2009)
NRPS Batch Sheet

  1. The Batch Sheet is the first sheet of each batch. It contains the following information:

    • Page Number

    • Batch Number

    • Sort Group—"Special" ,"BALANCE DUE NOTICE" or "OVERPAID NOTICE"

    • Current Cycle

3.14.2.3.7  (01-01-2009)
NRPS Packages

  1. NRPS packages contain various types of information needed to review each selected CP Notice or Refund Transcript. Each batch may contain up to 20 selected notices.

    Note:

    Packages for overpayment notices must be viewed on-line first. Most packages contain only one notice. However, the NRPS Package will contain all Selectable or Associated CP Notices that generate in the current cycle for a taxpayer if one or more is selected for review. Each NRPS package contains the following:

    1. Package Contents Page—View online as the first page of each NRPS Package. This page contains the following information:

      Package Contents Page

      NRPS Package Contents:
      A list of all Selected or Associated CP Notices or Refund Transcripts in the package with CP# and Document Locator Number (DLN)
      The Selection Key Number along with a brief description of the Key
      A list of pending transactions
      A list of requested vouchers and documents
      Manual Intervention Indicators

    2. Online Notice Information—Depending on the CP number of the selected notice, this may either be a duplicate of the "live" notice, or a shortened version. The shortened version, displays only the notice record information, such as dollar amounts and TPNC numbers, as opposed to Taxpayer Bill of Rights language and TPNC explanations.

    3. Entity Transcript—This displays the entity information for the notice Taxpayer Identification Number (TIN).

    4. Tax Module Transcript (optional) —This displays the tax module transactions for the notice TIN.

    5. Transcribed Posted Return Data—This displays transcribed return fields for selected Settlement Notices

    6. "813" List—This list displays only for Remittance Processing System (RPS) Discrepancy cases.

3.14.2.3.8  (01-01-2009)
NRPS Selection List

  1. This list is the last page of each batch. It shows the following information for each Selected CP Notice in the batch:

    • Count (item number on the list)

    • Sequence #

    • Employer Identification Number (EIN)

    • Master File Transaction (MFT)

    • Tax Period

    • DLN

    • CP Number

    • Primary Selection Key

    • Secondary Selection Key

3.14.2.3.9  (01-01-2009)
Other Output

  1. NRPS produces two different (but related) Batch Control Sheets.

    1. The Notice Review copy has one line for each batch, showing the number of Selected and Associated CPs and Document Requests in each batch.

    2. The Files Function copy has a line for each batch, showing the number of Document Charge-outs in each batch.

  2. The NRPS Document Charge-out provides information that the Files Function needs to pull documents for Notice Review to use in reviewing CP Notices.

  3. The NRPS Batch Return Request List is a "cover sheet" that separates the Document Charge-outs by batch and contains a line for each charge-out.

  4. The Manual Intervention List provides a list (in notice sequence number order) of all notices that were not selected for review but may require "manual intervention."

    1. See IRM 3.14.2.4.2 (Manual Intervention List) for additional information and procedures.

  5. The NRPS Selection Report contains various statistical data including the number of CPs selected. This report is sorted by CP# and Selection Key. See Exhibit 3.14.2-48. (BMF NRPS Selection Report).

3.14.2.4  (01-01-2009)
Procedures

  1. This section describes the procedures performed during the Notice Review process.

3.14.2.4.1  (01-01-2009)
Clerical Function

  1. The clerical function provides a wide variety of services critical to the NRPS system. These services, outlines in Sections 4.1 and 4.2, assist Notice Review Tax Examiners (and other customers) in providing accurate information to the taxpayer. The clerical support staff:

    • Orders and sorts tax returns

    • Distributes NRPS packages and related documents to the tax examiners

    • Corrects erroneous, and undeliverable notices

    • Stops refunds

    • Resolves CAF and RAF mismatches on notices that generate on the Manual Intervention List

3.14.2.4.1.1  (01-01-2009)
Clerical Function Priorities

  1. This subsection contains instructions dealing with clerical function priorities. It includes instructions for associating tax returns and payment vouchers, reviewing priority, intercepting requests from other areas, notice corrections, and releasing notices to Receipt and Control.

3.14.2.4.1.2  (01-01-2009)
Associating Documents from Files

  1. Document Request forms (Return Charge-outs) and a Batch Return Request List generates weekly.

    1. The Files Function uses these forms to pull returns needed by Notice Review to review notices. They route the returns in batch order (per the Batch Return Request List) to Notice Review.

    2. The Notice Review Clerical Function associates the Batch Return Request List and the attached returns with the corresponding NRPS batch sheets.

  2. All necessary documents (adjustment documents and tax returns) are associated with each batch before releasing to tax examiners. All NRPS batch sheets that do not need documents are routed directly to Notice Review.

3.14.2.4.1.3  (01-01-2009)
Priority of Review

  1. Error Resolution System (ERS) may request that Notice Review select and correct a specific notice:

    1. ERS Tax Examiner must prepare Form 3465 and send it with the return to Notice Review.

    2. Local Control File (LCF) Key 091 is used to select the notice for review by DLN.

    3. Notice Review Clerical Support will associate the return and Form 3465 with the NRPS batch and release the case to the Tax Examiner Unit.

  2. The Clerical Support Unit will distribute the work in the following order of priority:

    1. Selected Overpayment Notices and Refund Transcripts—Tax examiner must complete this review before the pre-determined cut-off of CC NOREF (10:00 am Friday). Local management must decide the disposition of overpayment notices not reviewed by the cut-off. In doing so, consider prior cycle error rates of the individual CP Notices and selection keys.

      Exception:

      Treat notices selected by BMF Key 52 as overpayment notices because the current cycle refund is the reason for the review.

    2. Selected Balance Due Notices.

3.14.2.4.1.4  (01-01-2009)
Intercept Requests from Other Areas

  1. Universal Taxpayer Information File (TIF) has made it possible to intercept a refund from any campus. However, not all functional areas within the Service, including Regional and Area Offices, have access to the CC NOREF. If the request is received from one of those areas, service the request. Tell them that the request has to be received by 10:00 AM on Friday before the 23C Date of the notice. The request must also include the following information:

    • Taxpayer Identification Number (TIN)

    • Name Control

    • MFT and Tax Period

    • Cycle of TC 846

    • DLN of the TC 846

    • TC 846 amount

    • Location Code

    • Zip Code - This is no longer a required field.

    • Reason Code

    • RSN (Refund Schedule Number)

    • Requestor's name, telephone number, and employee number

      Note:

      Tell other functions of the CC NOREF cutoff time. If the deadline cannot be met, the Holds Automated Listing (HAL) is a manual back-up system for NOREF.

  2. Other functions may request that an incorrect notice be corrected or stopped. However, it has to be a selectable notice, and the request has to be received in Notice Review within established deadline cut off times.

    1. Established deadlines for requesting a notice:

      Deadlines for Requesting Notices

      If the request is for Then the Request Must Be Received By
      A current cycle notice Close of Business (COB) Thursday before the 23C Date of the notice.
      A subsequent cycle notice The request must be received by Wednesday before the notice cycle.

    2. Notice Review Clerical Team uses the Local Control File to intercept the notice.

      Note:

      Tell other functions of the notice request deadline and the Wednesday Local Control File cutoff time per local procedures.

3.14.2.4.1.5  (01-01-2009)
Notice Corrections

  1. Prioritize retypes in the following order:

    1. Balance Due Notice Retypes.

    2. Overpayment Notice Retypes.

    3. Other — Undeliverables, Restricted Penalty and/or Interest, Entity only changes, CAF/RAF mismatches.

      Note:

      With the release of BMF Retypes Phase I, Manual Intervention and Label only notices can be corrected on line, therefore eliminating the need to sort and release those notices to Receipt and Control.

3.14.2.4.1.6  (01-01-2009)
Releasing Notices to Receipt and Control (Machine Services)

  1. Sort the Retype notices before release to Receipt and Control:

    1. Separate the Notices by type (overpayment/balance due)

    2. Separate the Notices having an Appeal Rights Indicator ("A" ). Instruct Receipt and Control to insert Notice 746 with these

    3. Sort all retyped notices by CP number

  2. Release the notices by the following deadlines:

    1. Master File Balance Due notices no later than 10:00 AM on the Friday before the 23C Date

    2. Overpayment and Information Notices no later than the 23C Date

    3. IDRS Notices no later than Friday morning before the notice date

3.14.2.4.2  (01-01-2009)
Manual Intervention List

  1. The notices generated on the Manual Intervention List do not meet NRPS selection criteria. However, it has been decided that they do require some sort of manual review and correction. Manual Intervention conditions are as follows:

    1. Central Authorization File (CAF) mismatch

    2. Reporting Agent's File (RAF) mismatch

  2. When the notice with Manual Intervention criteria is selected based on NRPS key criteria, the tax examiner is responsible for resolving the potential notice issue and the manual intervention conditions. Clerical is only responsible for resolving notices that generate on the Manual Intervention Listing.

  3. Processing Notices with "Power of Attorney" (POA) and Central Authorization File (CAF) Mismatch indicators.

    1. The CAF copy of the notices will generate with the representative's name and address on the notice. If the notice has the representative's name with no address, it is considered a CAF mismatch condition and will be notated on the Notice List. NRPS will compile all CAF mismatch notices and include them on the Manual Intervention List. A literal will print out on the list indicating the CAF mismatch by notice sequence number and CP number.

    2. Research the CAF mismatches on IDRS . Use CC CFINK to identify the representative name and address.

    3. Using CFINK, request the specific year-ending period.

    4. Check for "N" on the receipts line. The"N" indicates the representative is authorized to receive notices.

      The Literal N on CC CFINK

      If Then
      "N" is not present Void the CAF notice.
      "N" is present for one or more representative Type the name and address of each representative(s) on the notice(s) and mail.

      Note:

      If the name of the second representative is the same or similar to the first representative, and the address is identical, do not use the second representative. Void the second CAF copy if applicable. If the representative for the CAF is the same representative for the RAF, void the RAF copy.

    5. Check the Rep-Action line for any of the following words; Undeliverable, Suspended, Deceased, Disbarred or None. If present follow the instructions in the table below:

      Rep-Action Decision Table

      If Then
      The word "Undeliverable" is present on the Rep-Action line; Do not mail the notice. Make a print showing the "Undeliverable." Associate the CFINK print and the CP with the return to show why the representative did not get the notice.
      The words "Disbarred" , "Suspended" or "Deceased" is present on the Rep-Action line; Void the CAF notice.
      The word "None" is present on the Rep-Action line; Type the name and address of the representative on the notice and mail it.

  4. If "RECORD NOT FOUND" for the taxpayer on the CAF file, void the duplicate notice.

  5. Processing Notices with Reporting Agents File (RAF) Mismatch.

    1. Reporting Agents File notices (RAF) are similar to CAF notices, in that a copy of the notice will generate to the taxpayer, and a copy will generate to the Reporting Agent. Reporting Agents (RA) can file the Form 941, 941PR, 941SS, 941NMI, 940, 940PR, 943, 943PR, 944, 945 and CT-1 for their clients. An RA can also submit electronic payments for their clients on the previously mentioned forms, as well as Forms 720, 1042, 1041, 1120, 990PF, and 1120C.

      Note:

      Form 1120C replaced Form 990C. Form 1120C is valid for all tax periods ending after 200611.

    2. Most notices will have the RA's name and address printed on the notice. A mismatch (MISM) occurs when the RA's name and address do not generate on the RAF copy of the notice. A Manual Intervention List is produced to identify CAF and RAF mismatches. RAF mismatches are identified with the literal RAF MIS.

    3. The RA information can be obtained on IDRS using CC RFINK. CC RFINK with the definer R will provide the Reporting Agents EIN. CC RFINK with the definer L requires the taxpayers EIN on the first line and RA's EIN on the second line. This will display the beginning tax period and ending dates the RA has authorization and whether they should receive copies of the notice.

    4. CC RFINK will display a notice indicator of "N" (not authorized to receive notices), or "Y" (authorized to receive notices). See table below for further instructions. Electronic Federal Tax Payment System (EFTPS) modules will have a payment indicator of "P" .

      CC RFINK Notice Indicators

      If Then
      The Notice indicator "Y" (authorized to receive notices) is present Follow instructions in 5 (d) above to decide whether the Reporting Agent is authorized for the tax period shown on the notice.
      The Notice indicator"N" (not authorized to receive notices) is present Destroy the duplicate notice.

      Note:

      If the representative for the CAF is the same representative for the RAF, void the RAF copy.

    5. The Tax Period shown on CC RFINK is the "Beginning Period" the Reporting Agent has authorization. See table below for further instructions.

      Tax Periods on CC RFINK

      If Then
      The tax period shown on CC RFINK (per MFT on the notice) is prior to the tax period on the notice; This Reporting Agent is still authorized to receive notices.
      The tax period shown on CC RFINK (per MFT on the notice) is later than the tax period on the notice; A new Reporting Agent has been authorized. Do not mail the notice to this Reporting Agent.

    6. For paper filed returns, if the CC RFINK screen shows the representative's address is undeliverable, associate the duplicate notice to the return with a print of the undeliverable address. For electronically filed returns, do not use the attachment or association form. A TC 290 .00, blocking series 05/15/17 (non-refile DLN) will be input. Attach the print of the undeliverable address to the adjustment tag.

3.14.2.4.3  (01-01-2009)
NRPS Local Control File

  1. The NRPS Local Control File processing is designed to allow each Campus the option to obtain additional notices for review. BMF has a priority option that when exercised, moves the analysis for the selection from Category H to the second highest Category B. The Local Control File priority option does not override the Category A selection criteria.

  2. There are three programs used by Clerical to update and maintain the NRPS Local Control Data base.

    1. Program NRP97 is used by Notice Review to add, change and delete records on the Local Control Data base. Program NRP97 is an IDRS Command Code accessed from any IDRS Terminal.

    2. Program NRP98 is a batch processing program executed by operations each Friday. This program creates Local Control File tapes for input into the weekly NRPS processing. Local control reports are produced detailing the contents of the Local Control File. These reports are intended to be reviewed by Notice Review before the input of the Local Control tape files into the weekly National Account System (NAS) program. NRP98 is run on Thursday AM before running NRP11.

    3. Program NRP99 is a batch processing program executed by Operations after the completion of the weekly NRPS processing. This program deletes records from the Local Control Data Base as a result of the NRPS processing, or when a TIN or DLN record has remained on the Data Base for six weeks. Local Control reports are produced by this processing. These reports show which records were deleted and why they were deleted and detail the records remaining on the Data Base.

      Note:

      Refer to IRM 2.4.45 IDRS terminal input of CC NRP97. Use NRPS command codes to change the NRPS Local Control Data Base.

  3. NRPS Local Control Data Base consist of ten NRPS record types:

    • NRPS-TIN-REC

    • NRPS-DLN-REC

    • NRPS-TPNC-REC

    • NRPS-MFT-TAXPRD-REC

    • NRPS-CPNUM-REC

    • NRPS-BAL-DUE-REC

    • NRPS-LG-CORP-REC

    • NRPS-ADJ-REC

    • NRPS-Employment-CD-REC

    • NRPS-MISC-REC

  4. Each record type may be updated by command code NRP97 with a unique command code definer. The following is a list of both the definer codes and the record types:

    NRP97 CC Definer

    Definer Record Type
    T EIN option
    D DLN
    N TPNC
    M MFT/TAX/PRD
    C CP NUMBER/ZIP CODE
    B Balance due amount
    L Large Corporation
    A Adj reason code
    E Employment code
    I Miscellaneous BMF

    1. These command code literals appear on the BASIC OPTIONS menu screen generated by command code NRP97.

    2. Besides the updating options (display, change, add, delete), there are two options provided on the command code screens. The "OPTION-MENU" is used to display the Basic Options menu screen on which the user may select another option to continue updating another NRPS record type. The "EXIT TAP" option is used to clear the entire screen and continue to input another command code if desired, or to sign off the IDRS terminal.

  5. Do not run NRPS command code to update records in between the weekly runs NRP98 and NRP99. However, you can use them for research during this period. If any records have been updated in between these two runs, these updated records will not appear on the NRPS Data Base after NRP99 run. This restriction will ensure continuity in the data base throughout the weekend NRPS runs.

  6. Data Retention— Records will only be deleted from the NRPS Local Control Data Base under the following circumstances:

    1. EIN (except Large Corporation), ERS DLN and Full DLN records are automatically deleted when selected for review or after six weeks if not selected.

    2. Any record may be manually deleted by selecting the appropriate Option from the Option Menu, keying in enough information to identify the record. Then use the "X" to select the "Delete" action and hit XMIT key.

  7. Data change— Any existing local control record may be altered as desired. To use this capability:

    1. Select the appropriate Option from the Option Menu.

    2. Enter enough information to identify the record.

    3. Alter the record as desired and use "X" to select the "change" action.

    4. Hit the XMIT key to save the changes.

  8. Selection Keys— The following is a list of the Selection Keys assigned when a notice is selected for review by Local Control:

    1. 06—Large Corporation Selection

    2. 90—EIN Selection

    3. 91—ERS DLN selection

    4. 92—CP number Selection

    5. 93—Balance Due Amount Selection

    6. 94—Full or Partial DLN Selection

    7. 95—Penalty Code Selection

  9. Substitute Keys— Selection Keys 85, 86, 87, 88, 89, and 99 are reserved for use as Substitute Selection Keys. Substitute Keys can only be used to replace Selection Keys 90 through 96. Large corporation, TPNC, Exception Override and normal criteria selections do not have substitute keys. Terminology:

    1. Batch processing is simply a computer term for any computer program that executes without human intervention except for duties normally performed by a computer operator

    2. Interactive Processing is the opposite of Batch processing. This is a computer program designed to interact with a person, normally using a remote terminal as the interactive device.

    Note:

    Percentages valid on Local Control File—1%, 10%, 25%, 33%, 50%, 75%, and 100%.

3.14.2.4.4  (01-01-2009)
Monthly/Weekly Reporting

  1. The Notice Disposition reports are analyzed each week to track the effectiveness of NRPS selection criteria and to provide feedback to pipeline areas that may cause errors.

3.14.2.4.5  (01-01-2009)
Refund Intercepts

  1. Use CC NOREF to input all refund intercept requests.

    Exception:

    Contact Ogden Campus Notice Review at (801) 620-6325 to intercept an Army Post Office (APO), Fleet Post Office (FPO), or international (DLN 78) address refund.

  2. The cutoff for CC NOREF is Friday by 10:00 am (Central Time).

  3. CC NOREF cannot be used to intercept refunds during Accelerated Refund Cycles. During these cycles, the refund checks are mailed one week early to reduce credit interest paid on the refund. Follow normal review procedures in conjunction with Erroneous Refund procedures (see IRM 3.14.2.4.5.2)

    Exception:

    Notice Review may contact the Financial Center directly for unusual intercept requests. Contact the Team Lead to decide if the case meets the criteria for this exception.

    .

  4. The following CC NOREF definers are used in Notice Review:

    • CC NOREF intercepts refunds and updates the Refund Information File

    • CC NOREFD deletes an intercept request in the same cycle the request was input.

    • CC NOREFC updates the Refund Information File when an intercept is requested by phone

    • CC NOREFM updates the Refund Information File if a check was not intercepted by the Regional Disbursing Office

  5. CC NOREF will establish a case control base on TXMOD. See Figure 3.14.2-1 (CC NOREF) for input format.

  6. CC NOREF creates an activity code in the format, "ppxxxxxxyy." See below:

    CC NOREF Activity Code

    "PP" Activity:
      RR — Initial Refund Intercept Request
      RD — Intercept Request Deleted
      RC — Intercept Request Correct
      RM — Intercept Request "Missed"
    "xxxxxx" TC 846 (refund) posting cycle
    "yy" Refund Deletion Code (See Exhibit 3.14.2–64 Processing Refund Deletion Codes).

    Figure 3.14.2-1
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    CC NOREF Example

  7. CC NOREFD will cancel a NOREF intercept request if input before the Friday cutoff. See Figure 3.14.2-1 for NOREFD input.

    Note:

    If the control base has been closed and a CC NOREF was erroneously input, then utilize CC ACTON to reestablish a new control baseto input the CC NOREFDto delete the CC NOREF. This must be done within the same cycle the CC NOREF was input. If there is any doubt on how to preform this procedure, contact the Team Lead for assistance.

  8. HAL (Holds Automated Listing) is a manual backup system used to intercept refunds after the CC NOREF deadline has passed. Meet the NOREF deadline whenever possible to avoid any unnecessary use of HAL to intercept refunds. The following applies to HAL:

    1. Delete deadline is the following Monday, 10:00 am (Central Time)

    2. Does not generate an open control base (see Reminder below)

    3. Can take up to 6 weeks for the TC 841 to post

    4. Financial Management System (FMS) must physically locate and pull the refund checks.

      Reminder:

      Remind the tax examiner or requester to open a control base using CC ACTON. Cut AND PASTE TO TAX EXAMINER SECTION
      ACTON
      C#,HDXXXXXXXX,B,RFDL
      *,*
      HD = HAL Delete; next 6 digits = refund cycle; last 2 digits = refund code.

  9. Use the Refund Schedule Number (RSN) to decide the campus to contact to have a refund deleted using HAL. The RSN is located directly below the TC 846 on TXMOD. The RSN consists of up to 14 digit elements displayed as "YYYYJJJSCXAAAA" . (See table below)

    RSN Table

    Element Description
    YYYY Processing Year
    JJJ Julian date of the refund
    SC Campus issuing the refund::
    07 -- Atlanta Submission Processing Campus (ATSPC)
    08 -- Andover Submission Processing Campus (ANSPC)
    09 -- Kansas City Submission Processing Campus (KCSPC)
    17 -- Cincinnati Submission Processing Campus (CSPC)
    18 -- Austin Submission Processing Campus (AUSPC)
    19 -- CSPC
    28 -- Philadelphia Submission Processing Campus (PSPC)
    29 -- Ogden Submission Processing Campus (OSPC)
    49 -- Memphis Submission Processing Campus (MSPC)
    89 -- Fresno Submission Processing Campus (FSPC)
    X File Type:
    0 -- Business Master File (BMF)
    1 -- IMF
    3 -- Customer Account Data Engine (CADE)
    4 -- Individual Retirement Account File (IRAF)
    5 -- Other
    6 -- Non Master File (NMF)
    AA Alpha character defining type of refund:
    F -- Regular Electron File Transfer (EFT)
    I -- Foreign paper
    Fi -- Foreign EFT
    X -- Accelerated regular paper
    Xi -- Accelerated Foreign paper
    * If blank -- regular paper *

    Note:

    For more information and instructions on inputting HAL see IRM 21.4 Refund Inquiries.

3.14.2.4.5.1  (01-01-2009)
Reconciling Refund Deletion Requests

  1. Regional Financial Centers will fax a list to the Campuses of the refunds that were not intercepted. Conduct research on "Missed" refunds for corrections needed. Input necessary corrections to the HAL system (see Holds Automated Listing). Use CC NOREFM to update the IDRS account information for the refunds that were missed.

  2. Campuses must contact the area office nearest the taxpayer's home. See Document 6209, Section 11 for phone numbers. (Local Procedures may dictate which checks require area office contact.) Provide the following information to the area office and request that a Revenue Officer contact the taxpayer to secure the refund check or a cash equivalent:

    1. Taxpayer's name

    2. EIN

    3. Address

    4. Business address

    5. Refund amount

    6. Tax Class

    7. Tax Period

    8. Date of the erroneous refund

3.14.2.4.5.2  (01-01-2009)
Erroneous Refunds

  1. This section provides information on processing erroneous refunds. The IRS sometimes issues a refund to a taxpayer who is not entitled to the money. When this occurs, the refund is known as an Erroneous Refund. See IRM 21.4.5for more detailed instructions on classifying and processing Erroneous Refunds and for procedures not listed below.

  2. An Erroneous Refund is defined as "any receipt of money from the Service to which the recipient is not entitled." This definition includes all erroneous payments to taxpayers, even if the non-entitlement could not have been known at the time of the refund. The taxpayer may or may not have made an intentional misstatement of income or credits to the IRS.

  3. There are two types of Erroneous Refunds:

    1. Rebate Erroneous Refunds: are Categories "A1" , "A2" , and "C" requiring a recalculation of the tax liability. Generally these occur when the taxpayer incorrectly computes the tax calculation. Refer to IRC § 6211(b)(2).

    2. Non-Rebate Erroneous Refunds: are Categories "B," and "D" and sometimes "C," from clerical or ministerial mistakes that do not involve a redetermination of the tax liability. Generally, these occur when there is a payment or a processing error NOT affecting the tax calculation.

  4. The following situations may cause or create an erroneous refund. This list is not all encompassing and other causes and effects do exist.

    1. Misapplied payments — A payment applied to the wrong TIN. The misapplied payment overpays the account, causing an erroneous refund.

    2. A taxpayer's designatedpayment posts to the correct TIN but the wrong type of tax or tax year.

    3. A credit refund, of any type, if the taxpayer is not entitled.

    4. Return of court ordered restitution.

    5. An incorrect tax assessment, such as an incorrect use of Hold Codes or Priority Codes causing an incorrect refund.

    6. Anincorrect tax adjustment causing an erroneous refund.

    7. Two taxpayers file refund returns, using the same TIN, and the refund goes to the wrong taxpayer.

    8. A taxpayer fraudulently or by mistake, receives refunds from more than one TIN for the same tax period.

    9. A taxpayer receives a manual refund (TC 840) and a computer— generated refund (TC 846)for the same overpayment.

    10. A taxpayer files a claim on a lost check, receives a replacement check, finds the original check and cashes both.

    11. A taxpayer makes an advance payment against a pending tax increase, and the money refunds before tax assessment posts.

    12. Incorrectly computed restricted interest.

    13. A Direct Deposit is applied to the wrong taxpayer's accountdue to IRS error. (Owner of account may or may not be known).

    14. Improper release of the TC 700 (false credit) "-U" Freeze. See Document 6209, Section 8, for a complete description of TC 700.

      Note:

      On Category D Erroneous Refunds, the Submission Processing Accounting/Erroneous Refund Unit (A/ER), inputs a TC 700 to remove the erroneous refund amount on Master File and the account is reestablished in Accounting. This action is taken to prevent administrative collection action (liens or levies) from occurring on the erroneous refund liability. Do NOT release the TC 700 credit.

    15. Statute Barred Refunds.

    16. Taxpayer receives erroneous Health Care Tax Credit (HCTC).

  5. Erroneous refund procedures are not necessary in the following situations:

    1. A signature is missing.

    2. Credit elect requested by the taxpayer has refunded.

    3. In situation where an error found in Notice Review increases the original tax (TC 150) and there was not a previous tax decrease, treat the tax increase as a regular turnaround case instead of an erroneous refund. Make the adjustment using Blocking Series 00 (non-income tax returns) or 77 (income tax returns) with Hold Code 0. Apply Label #16 and mail the original notice.

  6. Route returns that need to be reprocessed that also have an erroneous refund to Accounts Management follow the procedures listed below:

    1. Order the return if it is not already with the case.

    2. Complete Form 3465, explaining the erroneous refund and the reason for the adjustment.

    3. Void the notice.

    4. Recharge the return and route the case to Accounts Management.

  7. Once an Erroneous Refund has been identified, it must be categorized to decide what further actions will be taken. The most common categories worked in Notice Review are "A1" , "A2" , "B" , "C" , and "D" .

    Erroneous Refund Categories

    If Example Then the Category is
    The Erroneous Refund relates to TC's 150, 29X, and/or 30X and the MFT's are not01, 09, 10, 11, 12, 16, or 88. 1. The IRS lowered the tax when originally processing the Form 1120.
    2. Incorrect tax assessment or incorrect adjustments (TC 29X or 30X), on a Form 1120X.     		"A1"
    Rebate Erroneous Refund 1 & 2 Refer to Exam for deficiency processing. (Only refer cases if ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , do not pursue. IRC §6211 (b) (2)and IRM 21.4.5.4.2(7).
    The erroneous refund relates to disallowed EITC, TC 764, 766 OR 768 or disallowed refundable or nonrefundable tax credits. The taxpayer income tax return not claiming any Rate Reduction Credit (RRC). An error was made during processing and IRS allowed $300 in RRC causing a refund of $300 RRC. TP contacts IRS explaining that he or she has already received the maximum amount of credit the previous year and is not entitled to the credit. "A2" Rebate Erroneous Refund. This was an IRS error. Refer to Exam for deficiency processing. (Only refer cases if ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ do not pursue. IRC 6211 (b) (2) and IRM 21.4.5.4.2.
    The Erroneous Refund relates to taxpayer overstatement of withholding (TC 80X) or ES payments (TC 66X). The taxpayer claimed withholding of $1,000 on Form 1041 and the supporting documentation only states $500 "B"
    Non-rebate Erroneous Refunds
    The Erroneous Refund relates to TC's 150, 29X, and/or 30X and theMFTs are01, 09, 10, 11, 12, 16 or 88. 1. The IRS makes an incorrect tax assessment (TC 150) on Form 940 or Form 941.
    2. The IRS makes an incorrect adjustment to tax (TC 29X or TC 30X) on Form 940 or Form 941.     		"C"
    Rebate Erroneous Refunds 1 & 2 Refer to Exam for deficiency processing.
    The Erroneous Refund relates to any error not included in the above categories. 1. A misapplied payment (TC's 6XX).
    2. Incorrect refundable credits (HCTC) or other credits not included in Category "B" .
    3. TC's 840 & 846 posted for the same overpayment, or
    4. Refunds issued after expiration of the Statute of Limitations, or
    5. Entity errors.     		"D"
    Non-rebate Erroneous Refunds

  8. Category "A1" -- Rebate Erroneous Refunds

    1. Do not input the adjustment.

    2. Mail the notice with no changes or labels.

    3. Input history item "CATA1/XXXM" or IDRS. (XXX=CP#)

    4. Recharge the return to Exam using CC ESTABDT.

    5. Prepare Form 3465showing the adjustment action to be taken. Staple the Form 3465 to the front of the return (or to the back of a print of CC BRTVU for Electronic File (Electronic File (ELF)) returns) below the Entity. ( See Figure 3.14.2-2.Form 3465 A1).

    6. Staple a copy of TXMOD to the front of the return (or to the back of theBRTVU print for Electronic File (ELF) returns).

    7. Route the Erroneous Refund package to Exam.

      Figure 3.14.2-2

      This image is too large to be displayed in the current screen. Please click the link to view the image.

      Form 3465 A1

  9. Category "B" — Non-rebate Erroneous Refunds for income tax returns.

    Caution:

    If the IRS caused the overstated amount (key input error or misapplied payments), this case is considered a Category "D" (Non-rebate) case. Follow procedures for Category "D" cases.

    1. Add erroneous refund label to the notice. Mark the disposition online "L" . If the notice has already been mailed, skip this step. See Figure 3.14.2-3. (Labels 15 and 16).

      When to Use Erroneous Refund Labels

      If Then
      The entire refund is erroneous Use Label #15.
      A part of the refund is erroneous Use Label #16.

      Figure 3.14.2-3

      This image is too large to be displayed in the current screen. Please click the link to view the image.

      Labels 15 and 16

    2. Input the adjustment on IDRS with Hold Code 0. Use the return (or a print of BTRVU for Electronic File (ELF) returns) as a source document. Attach adjustment tag to return/BRTVU and refile as usual.

    3. If any offsets have occurred due to the erroneous credits, reverse the offsets.

  10. Category "C" — Rebate Erroneous Refunds limited to MFTs 01, 09, 10, 11, 12,16 or 88:

    Caution:

    If the IRS caused the overstated amount (key input error or misapplied payments), this case is considered a Category "D" (Non-rebate) case. Follow procedures for Category "D" cases.

    1. Add erroneous refund label to the notice. Mark the disposition online "L" . If the notice has already been mailed, skip this step. Refer to Figure 3.14.2–3.

      When to Use Erroneous Refund Labels

      If Then
      The entire refund is erroneous Use Label #15.
      A part of the refund is erroneous Use Label #16.

    2. Input the adjustment on IDRS with Hold Code 0. Use the return (or a print of BTRVU for Electronic File (ELF) returns) as a source document. Attach adjustment tag to return/BRTVU and refile as usual.

  11. Category "D" -- Non-rebate Erroneous refunds

    1. Add erroneous refund label to the notice. Mark the disposition online "L" . If the notice has already been mailed, skip this step. Refer to Figure 3.14.2– 3.

      When to Use Erroneous Refund Labels

      If Then
      The entire refund is erroneous Use Label #15.
      A part of the refund is erroneous Use Label #16.

    2. If the erroneous refund involves misapplied payments, reverse the payment(s) on IDRS using ADC/ADD24. Input a TC 570 on the debit side of the credit transfer to suppress a CP 260. Transfer the credit only if it belongs to another taxpayer.

    3. If the erroneous refund is due to an incorrect tax or credit, input the adjustment with a Hold Code 3. Use a copy of the return or a print of BRTVU for Electronic File (ELF) returns as a source document. Attach the adjustment tag to the source document.

    4. If any offsets have occurred due to the erroneous credits, reverse the offsets.

    5. Input TC 470 on REQ77 with closing code 93, Posting Delay Code 1. This holds notices for 26 cycles.

    6. Send 510C Letter to tell the taxpayer of the erroneous refund.

    7. Input TC 844 on REQ77. Do not input until after the TC 846 date.

      TC 844 Decision Table

      If Then Input
      The taxpayer is not at fault and the amount of the refund is $50,000.00 or less

      1. TC 844

      2. Extension Date: Date of input of 510C Letter plus 5 working days

      3. Transaction Date: Date of TC 846

      4. Freeze Release Amount: Erroneous part of the refund (including any erroneous credit interest)

      5. Remark: Erroneous Refund

      The taxpayer is at fault or the amount of the refund is more than $50,000.00

      1. TC 844

      2. Transaction Date: Date of TC 846

      3. Remarks: Erroneous Refund

    8. Complete Form 3465. (See Figure 3.14.2–4 Form 3465 D).

    9. Attach a print of TXMOD, a copy of the 510C Letter, a copy of the payment voucher or check (if caused by a misapplied payment), and any other pertinent documentation to Form 3465. If the adjustment involves withholding, attach a copy of the return (or BRTVU for Electronic File (ELF) returns).

    10. Route the Erroneous Refund package to Accounting. If sending the original return, recharge the document.

      Figure 3.14.2-4

      This image is too large to be displayed in the current screen. Please click the link to view the image.

      Form 3465 D

3.14.2.4.5.3  (01-01-2009)
Manual Refunds

  1. A Manual refund is an IDRS generated refund request (TC 840). Thorough analysis of the case is required before requesting a Manual Refund as it can greatly increase the possibility of a duplicate refund situation and can increase the processing cost of issuing a refund to the taxpayer.

    • Effective immediately there will be a redesign of the manual refund transmittal sheet to include a new initial line. When the front line manager reviews the timeliness of the monitoring process he or she will initial and date the transmittal. The department manager will review IDRS quarterly to prevent duplicate refunds from occurring. Refer to IRM 21.4.4.5 (9), Other Manual Refund Requirements, for further guidelines on this mandate.

  2. All Manual Refunds require management approval. Issue the manual refund under the following conditions:

    Manual Refund Decision Table

    If Then
    A refund must be issued before or instead of computer generated refunds (TC 846) Issue a manual refund.
    A refund was intercepted to verify unclaimed payments; the documents were unavailable and the taxpayer did not respond to requests for clarification Issue a manual refund for the substantiated payments.

    Example:

    A taxpayer claims three payments of $2000. each that are verified. The account shows an additional payment of $2,260. that cannot be verified. If the verifiable payment exceeds $5,000 issue a manual refund for $6,000 the amount that the taxpayer claimed.

    A refund is for $10,000,000 or more

    Note:

    Joint Committee review is required and no refund can be issued without the its approval.

    		 See the IRM 3.14.2.4.6.5($10,000,000 Refunds).
    The refund is for a prior year return with an original name line that has changed Issue a manual refund in the taxpayer's current name.

    Caution:

    Do not take any action on a case controlled by the Technical or Taxpayer Advocate Service Functions. Contact the controlling area and take action only if instructed by the area to do so.

  3. Before requesting an IDRS refund:

    1. Make sure that a computer generated refund will not generate.

    2. Intercept the refund (TC 846).

      Note:

      Monitor the account if a pending transaction may cause another refund to generate before the TC 840 posts.

  4. Be sure the case is complete and correct before issuing a manual refund. To avoid the generation of an 846:

    1. Use a Hold Code 1 (if original notice was mailed) or 4 (as appropriate) on a CC ADJ54 adjustment

    2. Use a TC 570 on a credit transfer.

3.14.2.4.5.3.1  (01-01-2009)
Manual Refund Research

  1. Obtain all necessary documents.

  2. Use the IDRS research Command Codes to review the taxpayer's account for a debit balance on another module.

    1. Do not transfer credit to satisfy a balance due if the assessed liability on TXMOD is less than ≡ ≡ ≡ ≡ ≡ ≡ and the accrued liability on INTST is less than ≡ ≡ ≡ ≡ ≡ .

    2. All Freeze Codes must be addressed before a manual refund is issued. Consult IRM 3.14.2.4.10 (Reviewing Notices With Freeze Codes) for additional Freeze Code information.

    3. Do not transfer payments/credits to a module containing a freeze code that would prevent the computer from offsetting credits unless it is certain the payments belong on the debit module.

      Note:

      For Z- Freeze, contact the Fraud Detection Function.

    4. For parent-subsidiary cases, only research the parent EIN for open liabilities.

    5. Large Corp cases are identified on TXMOD as "LARG-CORP>" , Send to Large Corp Function.

    6. Do not transfer money to accounts in Installment Status 14.

  3. decide whether to allow credit interest. See IRM 3.14.2.4.5.3.3 (Computing Credit Interest On Manual Refunds)

3.14.2.4.5.3.2  (01-01-2009)
Resolving a Manual Refund

  1. Complete Form 5792, Request for IDRS Generated Refunds (IGR). (See Exhibit 3.14.2-47 Form 5792 Request for IDRS Generated Refund)

    1. Take all necessary action to prevent an erroneous refund or erroneous notices from generating.

    2. In the remarks area of the Form 5792, write the taxpayer's TIN, the tax period, and the transaction code where the supporting document will be filed.

    3. If a manual refund will be issued to an address other than the Master File address, explain the different address in the remarks area and indicate where the supporting documentation will be filed.

    4. Monitor the case until the TC 840 posts. Input CC NOREF if necessary to prevent a duplicate TC 846 from generating.

      Caution:

      Treasury Inspector General for Tax Administration (TIGTA) and Headquarters program reviews have discovered an unacceptably high number of erroneous refunds issued due to inadequate monitoring and control of manual refunds.

  2. Input the "Return Processable Date" on IDRS if the correspondence was received after the Return Due Date.

    Changing the Correspondence Date

    If Then
    A CC REQ54 adjustment is needed Include the "Return Processable Date" with that adjustment. Use Hold Code 1 or 4, if necessary.
    A CC REQ54 adjustment is not needed Use CC REQ54 to input the "Return Processable Date." Input a TC 290 .00, Blocking Series 15, NSD, and a Hold Code 4.

  3. Use CC RFUNDR to input the information from Form 5792 on IDRS. The CC RFUNDR entity must exactly match the entity on Form 5792.

    1. If the manual refund will be issued to someone other than the taxpayer, (i.e. Executor or Executrix) the title must be indicated on the Form 5792 and CC RFUNDR.

      Note:

      CC RFUNDR will close the case unless the status is changed from "C."

  4. Attach a copy of the IDRS screen prints for the following Command Codes: COMPA, ENMOD, TXMODA, RFUNDR, REQ54/ADJ54, credit transfers (if input), and any additional supporting documents, as required by your local Accounting Branch.

  5. Submit the completed Form 5792 to your Team Lead for signature.

3.14.2.4.5.3.3  (01-01-2009)
Computing Credit Interest On Manual Refunds

  1. Credit interest is mandatory on an overpayment or refund if certain conditions specified in the Internal Revenue Code (IRC 6611) are met. Compute credit interest using CC COMPA.

  2. An overpayment is defined as an amount paid in excess of the tax liability. Tax liability includes tax, penalties and interest. Interest is paid on the available net overpayment.

  3. No interest is allowed if the refund is issued within 45 days after the later of the Return Due Date or Return Received Date.

  4. If the return is not in processable form, suspend the 45-day interest-free period. The return or case is not considered in "processable" form until all the required information, correspondence, or supporting documentation is received. On these cases, the start date for the 45-day interest-free period is the Correspondence Received Date (CRD).

  5. Use the later of the following dates to decide whether the 45–day interest-free period has lapsed:

    1. Return Due Date (RDD)

    2. Return Received Date

    3. Return Processable Date (or Correspondence Received Date - CRD)

  6. If the refund check date (the 23C Date) is not on or before 45 days from the later of these dates, decide the credit interest period.

    Determining the "From" Date

    If the Taxpayer Then Allow Interest From the Later of
    Has an extension and filed the return by the extended due date The original due date, the payment date, or the CRD (if after the extension date).
    Does not have an extension or filed the return after the extended due date The return received date, the payment received date, or the CRD (if present).

    Determining the Payment Dates

    If the Payment is a Then the Payment Date is
    Prepaid or timely credit, e.g., estimated tax payment, withholding (Form 1041), or a payment before the due date Due date of return
    Subsequent payment (made after the due date) Payment received date
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Determining the "To" Date

    If the Return Then
    Indicates an overpayment. The interest "To" date is one business day past the date of the manual refund.

    Note:

    The "Refund 23C Date" cannot be a Saturday, Sunday, or Holiday.

    Reminder:

    Night shifts must use local procedures.

  7. Use CC COMPA to compute credit interest for the period decided in (6) above.

3.14.2.4.6  (01-01-2009)
General Review Procedures

  1. Tax examiners must verify tax return information, the information contained on the notice and the information contained in the NRPS Package, using IDRS research Command Codes, to ensure the correct information generates on the notice.

  2. All related tax modules associated with the notice module as well as any associated notices must be reviewed and resolved, as applicable, with the resolution of the notice issue. Only one count will be allowed when associated notices and or modules have to be resolved in conjunction with the notice module.

  3. The notice module may contain multiple issues. All issues must be resolved before marking notice disposition. Refer to all appropriate sections of IRM 3.14.2 to ensure proper analysis and resolution of notice issue(s).

  4. Use the appropriate Command Codes (TERUP, NOREFD, etc.,) to reverse actions that may have been performed in error. Be mindful of specific time frames associated with your reversing actions. Contact your Team Lead for clarification if unsure. Some of the more common Command Codes used by Notice Review can be found in IRM 3.14.2.4.7, Common Command Codes Used in Notice Review.

  5. History Items are required when taking action on a module that contains an open control base.

  6. If you have to place someone in background status to perform your action, you must attempt to make contact before taking your action.

    • After two attempts at contact, if no response is received within two days after contact initiated, note contact information on quick print

    • Take the necessary action to resolve the notice

    • If any of the two day waiting period falls on the day cycle closes, take your action on the day cycle closes

  7. If no action will be taken on a module that contains an open control base, contact must be attempted before determining notice disposition. In Items 6 and 7, the contacted employee's name and phone number must be written on the quick print. If contact was made, indicate notice disposition; if none made, indicate "CNM" (contact not made).

  8. CP 215 Review — Perform a cursory review for possible duplicate and pending assessments. Take notice to your Work Lead for final determination.

  9. If the IRM contains inconsistencies and/or conflicting information, immediately submit this information to the Headquarters Analyst for resolution. Do not establish local procedures without first contacting the Headquarters Analyst.

  10. The following information and instructions attempt to address situations that are encountered most often when reviewing notices. These instructions cannot address every possible situation and/or issue encountered. They are to be used in conjunction with all the information contained in IRM 3.14.2, classroom training and sound tax examiner judgment. When in doubt, contact your Team Lead or Management.

3.14.2.4.6.1  (01-01-2009)
Manual Intervention (CAF/RAF)

  1. If Manual Intervention conditions on the notice module are identified on the NRPS contents page, use the following to aid in notice resolution and disposition:

    1. The Centralized Authorization File (CAF) is a listing of all Power of Attorneys (POA) information.

    2. The Reporting Agents File (RAF) is a listing of all agents that are authorized to receive notices. It is limited to filers of Forms 940, 941, 943, 944, 945, 720, 1041, 1120, 2290 and CT-1, for both paper and electronically submitted returns.

    3. If the notice generates with the representative's name and address in the entity, manual intervention will indicate match.

    4. If the notice generates with the representative's name and address blank, manual intervention will indicate mismatch

    5. Manual Intervention may indicate any combination of CAF Match, CAF Mismatch, RAF Match, or RAF Mismatch.

    6. Use CCs CFINK and RFINK on IDRS to decide notice disposition for CAF/RAF mismatch and locate an authorized representative's name and address.

  2. Research a CAF mismatch on CC CFINK with Taxpayer's TIN, and the specific MFT and tax period of the notice module.

    1. If CFINK response screen indicates, "RECORD NOT FOUND" , there is no authorized representative.

    2. If a representative is found, check the RECEIPTS line to decide if the representative is authorized to receive notices:

      Receipts Line Decision Table for CC CFINK

      If Then
      "N" is present The representative is authorized to receive notices.

      Note:

      More than one representative may be authorized to receive notices.
      "N" is not present The representative is not authorized to receive notices.

    3. Check the REP-ACTION line for the following:

      Rep-Action Line Decision Table

      If Then
      "Undeliverable" , "Disbarred" , "Suspended" , or "Deceased" is present The representative can no longer represent the taxpayer or the mail is undeliverable.
      "None" is present The representative is an authorized POA.

    4. Use CC CFINK with the "REP-number" to view display of each representative's address.

  3. Research a RAF mismatch on CC RFINK with taxpayer's TIN

    1. If CC RFINK response screen indicates, "NO DATA AVAILABLE" , there is no authorized representative.

    2. If a representative is found, CC RFINK will display the Reporting Agent's name and EIN as well as the MFTs and tax periods they are authorized to receive notices for. (See RFINK Notice Indicators table below)

      RFINK Notice Indicators

      If RFINK Then
      Shows a notice indicator of "Y" The representative is authorized to receive notices. Check the tax period to decide if the RAF is valid for the notice module.
      If the tax period of the notice Then
      Is the period of or later than the tax period on RFINK This Reporting Agent is authorized to receive the notice.
      Is the period before the tax period on RFINK A new agent has been authorized. This agent is not authorized to receive the notice.
      Shows a notice indicator of "N" The representative is not authorized to receive notices.

      Note:

      The tax period shown on CC RFINK is the beginning period the Reporting Agent has authorization.

    3. Use CC RFINK with definer "R" and the representative's EIN to view display of the representative's name and address.

  4. Notice disposition when a valid Authorized Representative is not located. (See Invalid Representative Disposition table below)

    Invalid Representative Disposition

    If And disposition of original CP is Then
    "N" is not present on CFINK or "Y" is not present on RFINK Print Select OLNR disposition "E" (Entity) and "void the CAF or RAF Entity" copy.
    "N" is not present on CFINK or "Y" is not present on RFINK Label Select OLNR disposition "R" (Retype) and "void the CAF or RAF Entity" copy. Then select the appropriate label from the Label Drop Down Menu.
    "N" is not present on CFINK or "Y" is not present on RFINK Retype Select OLNR disposition "R" and "void the CAF or RAF Entity" copy.
    "N" is not present on CFINK or "Y" is not present on RFINK Void No action required.
    "Disbarred" , "Suspended or Deceased is indicated" Print Select OLNR disposition "E" and "void the CAF or RAF Entity" copy.
    "Disbarred" , "Suspended or Deceased is indicated" Label Select OLNR disposition "R" and "void the CAF or RAF Entity" copy. Then select the appropriate label from the Label Drop Down Menu.
    "Disbarred" , "Suspended or Deceased is indicated" Retype Select OLNR disposition "R" and "void the CAF or RAF Entity" copy.
    "Disbarred" , "Suspended or Deceased is indicated" Void No action required.
    If the representative address is undeliverable Print Select OLNR disposition "E" and void the CAF or RAF Entity copy by checking the box located on the Entity Tab Screen. If the return is available, attach the quick print and a copy of the undeliverable address to the return. If the return is not available, staple the undeliverable address to a routing transmittal to associate with the return.
    If electronically-filed return, indicate "Electronic File (ELF)" on quick print.
    If the representative address is undeliverable Label Mark OLNR disposition "R" and void the CAF or RAF Entity copy by checking the box located on the Entity Tab Screen. Then select the appropriate label from the Label Drop Down Menu. If the return is available, attach the quick print and a copy of the undeliverable address to the return. If the return is not available, attached the undeliverable address to a routing transmittal to associate with the return.
    If electronically-filed return, indicate "Electronic File (ELF)" on quick print.
    If the representative address is undeliverable Retype Attach a print of the undeliverable address to the retype quick print. Clerical will retype a notice for the undeliverable CAF/RAF and attach the print of the CAF/RAF address and the notice to the return. If electronically filed return, indicate"Electronic File (ELF)" on quick print.
    If the representative address is undeliverable Void No action is required.

    Note:

    If the representative's address is undeliverable and the return was electronically filed, follow above instructions and indicate "Electronic File (ELF)" on Quick print for Print, Label or Retype. Clerical will input REQ54, Blocking Series 15/17 (non-refile DLN) with the CAF/RAF address print attached to the notice as the source document.

  5. Notice disposition when an authorized representative's address is located. (See CAF/RAF Notice Disposition table below)

    CAF/RAF Notice Disposition

    CAF/RAF NOTICE DISPOSITION
    (when an authorized representative's address is located)
    CAF/RAF Match CAF/RAF Mismatch
    Disposition of Original CP Additional Action Required Disposition of Original CP Additional Action Required
    PRINT None PRINT

    1. Select the OLNR disposition "E" .

    2. Add the CFINK or the RFINK address information to the CAF or RAF Entity Copy on the OLNR server.
    VOID None VOID None
    RETYPE None RETYPE

    1. Select OLNR disposition "R" .

    2. Add the CFINK or the RFINK address information to the CAF or RAF Entity copy on the OLNR server.
    LABEL None LABEL

    1. Select OLNR disposition "R" .

    2. Add the CFINK or the RFINK address information to the CAF or RAF Entity copy on the OLNR server.

    3. Select the appropriate label.

3.14.2.4.6.2  (01-01-2009)
Account Information

  1. Verify the following items for each selected notice:

    • Employer Identification Number

    • Document Locator Number

    • Name and address

    • Return Received Date

    • Tax period

    • Signature(s) for refund returns only

    • Taxpayer correspondence (if applicable)

    • Payments and credits

    • Discovered remittance (if applicable)

    • Dishonored payments and bad check penalties

    • Offsets

    • $10,000,000 refunds

    • Pending transactions

    • Slipped blocks and mixed data blocks

3.14.2.4.6.2.1  (01-01-2009)
Employer Identification Number (EIN)

  1. Compare the EIN on the return to the notice quick print. EIN discrepancies must be routed to Entity Control. The majority of business returns require an EIN, but an SSN followed by a one letter code is used for Forms 8288, 709 and 706 (V for valid SSN and W for an invalid SSN on BMF). Use CC NAMEB/NAMEI if you have reason to believe the EIN may have been changed. It may be necessary to use CC BMFOL if account for EIN is not available on TXMOD.

3.14.2.4.6.2.2  (01-01-2009)
Document Locator Numbers (DLN)

  1. Always verify the DLN on your return with the DLN on the notice or NRPS package to ensure that you are reviewing the proper document. If the DLNs do not match, follow local procedures to request the correct document.

3.14.2.4.6.2.3  (01-01-2009)
Name and Address

  1. Name–Compare the name on the tax return to the name on the notice or entity part of the refund transcript. The name on the notice must match the name on the return. If the name on the return is illegible, check the signature, return envelope or other attachments to decide the taxpayer's name. If the name on the notice is different, check INOLE under the EIN for the correct Master File name.

    1. If there is a misspelling or typographical error in the first or second name line, correct the misspelling or typo using CC ENREQ. Because of the nature of BMF tax accounts, ALL OTHER NAME LINE CHANGES MUST BE SENT TO ENTITY FOR CONSIDERATION. An error will be charged if name changes other than those listed above are initiated by a Notice Review employee.

    2. Before deleting a refund for name corrections, decide if the taxpayer will be able to cash the check. If yes, allow the refund, then use CC ENREQ to correct the taxpayer's account.

  2. Address—Compare the address on the tax return with the notice or refund transcript address. The notice must match the return. If the address is illegible, check the return and all attachments for clarification. Use the zip code directory to verify the zip code if the notice and the return do not agree, as well as the spelling of streets, cities and states.

    Note:

    The Desktop Integration (DI) tool is used by the centers to make address changes.

    The general guidelines to follow when making address changes are:

    1. Never change an address to an "in care of" unless the request is signed by the taxpayer or authorized representative. If a return, extension, etc. is received with an "in care of" address and is signed by the taxpayer, process the change.

    2. Change the address if signed correspondence is received from the taxpayer with the old street address lined through and a new address is written in.

    3. If the return has a response written on it, accept the information as coming from the taxpayer. Process the change even if the return is not signed.

    4. If a photocopy is received without an original signature, do not change.

    5. Requests for changes of address from CPA's, attorneys, etc., will be honored only if we have a valid Power of Attorney on file. Use CC CFINK to check for Power of Attorney file.

    6. When only minor address changes are needed, print the notice.
      Example of minor address changes:
      City name entered as TWN Falls must be Twin Falls. Do not change Entity for abbreviations such as Drive/Dr., Avenue/Ave.

      Note:

      If you are making a correction to the notice for another issue, the address must also be corrected.
      Examples where the Entity must be changed:
      Incorrect/missing bldg./trailer/apartment number. Jones Blvd. must be Jones St.

    7. When notices are printed with "LOCAL" as the address, do not mail these notices. The following criteria must be followed:

      1. Use ENMOD to find the latest entity information on a taxpayer.

      2. Input a FINDS/FINDE to obtain the taxpayer's current address information.

      3. Follow local procedures to find the location address if available.

      4. If none of the procedures shown above give a current address to use, then change the address to "GENERAL DELIVERY" after using the United States Postal Service website to verify the zip code.

      Reminder:

      Again please do not use the term "LOCAL" on any notices being mailed out.

    Caution:

    Anytime there is doubt about an address change, refer the case to the Team Lead/supervisor or the Campus Disclosure Office.

3.14.2.4.6.2.4  (01-01-2009)
Return Received Date

  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Any return received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ after the RDD must have the envelope attached and will carry the stamped "IRS Received Date" as the return received date unless the postmark date is on or before the RDD (as extended).

    Exception:

    A late filed return that was overlooked in processing may not be stamped. An incorrect received date will adversely affect penalty and interest computations.

    IRS Received Date Decision Table

    If the postmark date is Then the return received date is
    On or before the RDD and the postmark was made by the United States Postal Service, or a designated private delivery service under IRC Section 7502(f) The RDD regardless of when the return was received.
    After the RDD The IRS Received Date.

  2. The TC 610 date on the tax module is the return received date. The "DUE/RCVD DATE" field in the NRPS package also shows the received date.

  3. If there is a question about the received date, decide the correct received date in the following priority:

    1. Earliest postmark date on envelope, if there is no postmark on or before the RRD.

    2. Signature date; and

    3. Julian control date minus 10 days in the DLN, or

    4. Current date minus 10 days.

  4. Adjust all interest and penalties. (See IRM 3.14.2.4.21.1Recomputation of Interest and Penalties-General).

3.14.2.4.6.2.5  (01-01-2009)
Tax Period

  1. For most Business Returns, the type of return filed can have varied period/year endings. They are:

    1. Calendar Year—These are for a consecutive 12-month period ending on December 31. The tax period for this type of return is in the format CCYY12.

    2. Fiscal Year—These are for a consecutive 12-month period ending on the last day of a month other than December.

      Example:

      A return with a tax period ending January 31, 2007, would indicate a tax period of 200701.

    3. Short Year—These are for a consecutive period of fewer than 12 months. (See IRM 3.14.2.4.9.5Short Period Returns).

    4. Quarterly—These returns are filed 4 times a year (within a consecutive 12 month period beginning January 1, and ending December 31)

      Example:

      A first quarter return (Jan. -- March 31) would indicate a tax period of 0703 in format YYMM; second quarter, (April -- June 30) would indicate a tax period of 0706 in format YYMM, etc.

  2. Compare the year on the tax return to the tax period on the notice or on the NRPS Package Contents Page.

    1. Look for cross-outs and changes to the tax period part of the return.

      Note:

      Taxpayers often use current year tax forms to file prior year returns.

    2. Fiscal year returns are indicated at the top of the tax return.

    3. If the return is posted to the wrong tax period, reprocess the return to the correct tax period. (See IRM 3.14.2.4.22Reprocessing Returns).

3.14.2.4.6.2.6  (01-01-2009)
Signatures

  1. Tax returns are legal documents and must have a signature.

    Exception:

    Taxpayer signatures are not required for the following types of returns:

    • Returns filed under IRC 6020(b) or "prompt assessment" is notated.

    • Returns prepared by Examination, for example SFR (Substitute for Return)

    • Dummy returns filed by IRS

    • Correspondence is attached to the return showing that the taxpayer is responding to an IRS letter

  2. Constructive Signatures (signature on an attached check, letter, etc.) are not acceptable unless there is a perjury statement "JURAT" on the document which contains the signature. Otherwise the signature must be on the return.

  3. Tax return preparers may use a signature stamp. Taxpayers, however, must continue to sign returns with original signature.

  4. Facsimile signatures —Internal Revenue Procedure 2005–39 outlines the use of facsimile signatures by corporate officers or duly authorized agents when filing certain employer information returns. The Revenue Procedure includes the following tax forms:

    • Form 94X series, which include the Form 941X, Form 943X, Form 944X, Form 945X and Form CT-1X, including but not limited to Form 940, Employer's Annual Unemployment (FUTA) Tax Return; Form 941, Employer's Quarterly Federal Tax Return; Form 943, Employer's Annual Federal Tax Return for Agricultural Employees; Form 945, Annual return of Withheld Federal Income Tax

    • Form 1042, Annual Withholding Information Return for U.S. Source of Foreign Persons

    • Form 8027, Employer's Annual Information Return of Tip Income Allocated Tips

    • Form CT-1, Employer's Annual Railroad Retirement Tax Return

    • Any variant of these forms, such as Form 941C, Supporting Statement to Correct Information, which filed on Forms 941, 941M, 941-SS, 943 OR 945.

    • Form 941-SS, Employer's Quarterly Federal Tax Return.

      The facsimile signature may be in the form of a rubber stamp, mechanical devise or computer software program. The corporate officer or authorized agent is responsible for ensuring their facsimile signature is affixed to return. For more detailed information, please refer to Revenue Procedure 2005–39.

  5. If the signature is missing on a tax return requesting a refund or indicating a balance due and the tax module does not contain a Computer Condition Code (CCC) 3 or E, process the notice module as if the tax return was signed. If CCC 3 or E are present, consider those conditions when resolving the notice issue(s).

3.14.2.4.6.2.7  (01-01-2009)
Taxpayer Correspondence

  1. If taxpayer correspondence is discovered attached to the return, review it and follow through as necessary. Follow "Action 61" requirements if more than 25 days have elapsed from the date the return was received.

  2. If the correspondence is requesting action to be taken on the notice module:

    Correspondence Decision Table

    If Then
    The action can be taken Take the necessary action.
    Retype the notice as appropriate.
    Update History on IDRS, indicting "CORRW/RTN" as first History Item; indicate notice disposition with second History Item.
    Mailing of the notice within cycle will satisfy the Action 61 requirement.
    The action cannot be taken Photo copy the tax return and the original letter.
    Attach the photo copy to the original tax return.
    Route the original letter with a copy of the tax return to Accounts Management. (Write photo copy on the copy of the tax return).
    An Interim letter is required if more than 25 days have elapsed from the return received date.
    Update the account History to indicate action(s) taken.

  3. If the taxpayer is requesting an Installment Agreement or indicates an inability to pay and there is no indiction the letter was forwarded to Collections:

    1. Copy the letter and attach the copy to the return.

    2. Notate the original letter was sent to collections.

    3. Route the original letter to Collections.

    4. Make sure the taxpayer's name, address, and EIN is indicated on the correspondence.

    5. Input a STAUP for 9 cycles.

    6. An Interim letter is required if more than 25 days have elapsed from the return received date.

    7. Update the account History to indicate action(s) taken.

  4. Route Reasonable Cause requests to Accounts Management.

    1. If account in balance due status, input STAUP for 9 cycles.

    2. An Interim letter is required if more than 25 days have elapsed from the return received date.

    3. Update the account History to indicate action(s) taken.

  5. If correspondence indicates missing information that was not added when the tax return was processed, or requests assistance in computing tax or credits that is beyond the scope of Notice Review:

    1. Void the notice.

    2. Route to Accounts Management.

    3. Make sure the taxpayer's name, address, and EIN is indicated on the correspondence.

    4. Input STAUP for 9 cycles if account is in balance due status.

    5. An Interim letter is required if more than 25 days have elapsed from the return received date.

    6. Update the account History to indicate action(s) taken.

  6. If the correspondence is referencing a tax module(s) other than the notice module:

    1. Check IDRS for an open control base.

      IDRS Open Control Base Decision Table

      If Then
      There is an open control base Route the original letter to the tax examiner who has the case controlled.
      Indicate correspondence attached to original return on routing document.
      There is no open control base and the requested action has not been taken Input STAUP for 9 cycles.
      Route case to Accounts Management.
      Indicate correspondence attached to original return on routing document.

  7. The guidelines for Action 61 are established to insure the taxpayer receives an accurate, professional and timely response to correspondence submitted to the Service. In Notice Review, we will be responsible for sending interim responses to correspondence attached to original tax returns when it is decided the action requested has not been taken. If it can be decided the action requested has been taken, the mailing of the notice will satisfy our responsibility for the Action 61 requirement.

3.14.2.4.6.3  (01-01-2009)
Payments and Credits

  1. This subsection contains instructions dealing with payments and credits. It includes information on discovered remittance, dishonored payments, Bad Check Penalties and Bank Adjustments.

3.14.2.4.6.3.1  (01-01-2009)
Discovered Remittance

  1. When reviewing tax returns, especially Non-Math Error Balance Due notices, thoroughly search all attachments (including envelopes) for payments.

  2. Use the following procedures to process a discovered remittance:

    1. Prepare Form 3244 (Payment Voucher) in duplicate.

    2. Attach the carbon copy to the front of the tax return under the Entity section.

    3. Use CC ACTON to input a history item of "DISCREMIT" on IDRS.

    4. Input CC STAUP for 8 cycles on all balance due modules.

    5. Void, retype, or label the original notice as required.

    6. Prepare Form 4287 — Record of Discovered Remittance.

    7. Give remittance and the original copy of Form 3244 to Team Lead.

3.14.2.4.6.3.2  (01-02-2002)
Dishonored Payments and Bad Check Penalties

  1. If a Dishonored Payment transaction (TC's 611, 641, 651, 661, 671, 681, or 691) and penalty (TC 280 or 286) are pending on the notice module:

    1. Delete any refund.

    2. If the refund was deleted, wait for the TC 841 to post.

    3. Input CC STAUP for 6 cycles if a balance due remains.

    4. Retype the notice to include the Dishonored Payment Penalty (Notice Penalty Code "04" ). Update the balance due, refund amount, or credits on the notice using CC RECON and CC INTST.

      Note:

      Use CC RECON to update the module since CC INTST will not be accurate until the TC 280 or 286 posts.

3.14.2.4.6.3.3  (01-01-2007)
Bank Adjustments

  1. There may be instances where payments are en-coded incorrectly on a taxpayers account. If an obvious en-coding error is discovered, do the following:

    If And Then
    If the payment can be located on Remittance Transaction Research (RTR) system the amount of the check matches the amount posted to the account no further research is needed. Resolve the notice issue.
    If the payment can be located on RTR the amount of the check does not match the amount posted to the account This may be an encoding error. Print a copy of the check from RTR and follow the directions in the boxes below.
    Math error notice and the notice module is overpaid and a refund is scheduled to be released the payment is less than what the taxpayer is claiming 1. Allow the refund.
    2. Mail the notice.
    3. Send the necessary information to the functional area that resolves Bank Adjustment issues.
    Math error notice and the notice module is overpaid and a refund is scheduled to be released the payment is more than what the taxpayer is claiming

    Note:

    If the verified payments total $5,000.00 or more, issue a manual refund for the corrected refund amount. Void the notice, leave a history and follow Item 4 in next box.

    		1. Intercept the refund using CC NOREF.
    2. Use Refund Deletion code 99.
    3. Close your control base.
    4. Send necessary information to the functional area that resolves Bank Adjustment issues.
    If notice is a non-math error notice notice is balance due Void notice.
    Leave History Item
    Input STAUP for 9 cycles.
    Send necessary information to the functional area that resolves Bank Adjustment issues.
    If notice is a non-math error notice and notice is credit or even balance Void notice.
    leave History Item.
    Send necessary information to the functional area that resolves Bank Adjustment issues.
    If notice is a math error notice with a balance due and notice has EFTPS payment(s) Mail the notice. Send necessary information to the functional area that resolves Bank Adjustment issues.

3.14.2.4.6.4  (01-01-2009)
Offsets

  1. Offsets occur when credit is moved between different tax modules and/or taxpayer accounts. Credits can be moved manually, or are computer generated.

    Caution:

    All existing modules with a balance due ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ must be satisfied before inputting a manual refund or manually transferring a credit elect.

3.14.2.4.6.4.1  (01-01-2009)
Credit Elect—TC 830/710, 836/716

  1. Review the return to decide if the taxpayer requested that all or part of their overpayment be applied to the subsequent tax period.

    Caution:

    If any balance due module contains an —E Freeze, do not manually offset credit to satisfy the module. Transfer the credit elect as requested by the taxpayer.

  2. When the request is transcribed properly from a current period return, the computer will automatically offset the credit (TC 836/716) if it is available.

  3. If the full amount of the credit is not available when the return posted:

    1. For Forms 1041, 1120, 1120C, 990T, and 990 PF, the computer continues to offset as more credit becomes available until the full credit elect amount is satisfied. This capability only exists up to one year after the original tax period ending date. A Bypass Indicator 1 is not needed on Forms 1041, 1120, and 990, as long as it is still within one year of the original tax period ending date.

      Example:

      Up to December 31, 2007 for a 200612 tax return.

    2. For Forms 940, 941, 943, 944, 945, 720, CT–1, and 1042 the computer will not offset additional credit elect after the return posting cycle. A manual credit elect transfer must be input for subsequent offsets on these forms. (Input CC ADD48 on IDRS using TC 830/710).

  4. The following notices pertain specifically to Credit Elect situations:

    1. CP 147 – will only generate on an income tax return. It is issued when additional credit(s) become available and are computer offset

    2. CP 145 – must be pulled and associated with the case when adjusting an account if the credit elect will be affected

      Note:

      If a settlement notice generates, a "pop-in" paragraph will print on that notice to tell the taxpayer of the reduced Credit Elect amount.

  5. Forms 940, 941, 943, 944, and 945 — When the refund box is checked, Data Input System (DIS) will input a Refund Indicator, which generates the Computer Condition Code "S" at posting. When the "Neither" box is checked or the "Applied to Next Return" box is checked, the refund indicator is not input, Computer Condition Code "E" generates at posting, and the overpayment is applied to the next return (credit elect). Follow the instructions below:

    1. Verify that the entries match the Computer Condition Code posted to the notice module

    2. If there is an overpayment on the account that will refund, and any of the following occur, apply the credit elect using (6) below:

      • Neither of the boxes are checked.
      • The return is not available.
      • The computer Condition Code"E" is present on the notice module.

  6. If DIS did not properly transcribe the Credit Elect request and the credit is refunding:

    1. Delete the refund.

    2. Use CC ADD48 to manually transfer the Credit Elect amount as a TC 830/710. Be sure to use posting delay codes to allow time for the TC 841 to post to the module before the TC 830 posting.

    3. Monitor the case until the TC 841 posts.

  7. For Forms 941 and 944, if the taxpayer entered the credit elect or total FTD credits on the Advanced Earned Income Credit line in error and an erroneous TC 766 credit is present, delete the refund. Adjust the TC 766, using CC REQ54 on IDRS. Manually transfer the claimed credit elect if not already offset by the computer.

  8. Master File will not automatically offset requests for Credit Elect on prior year income tax returns and/or subsequent requests on all non-income tax returns.

    1. Use CC BMFOL to review the subsequent period.

    2. Manually input all subsequent credit elects on all prior year returns.

      Caution:

      Never transfer Credit Elect from a module with an expired RSED.

    3. Transfer claimed Credit Elect directly to a module separated by more than one tax period (e.g. 2004 to 2007), if all of the modules in between claim the same Credit Elect, are settled modules, and no penalties or interest will abate. Use the correct dates and an Override Code "2" on the Doc Code 48 transfer.

    4. All other offsets (TC 826 or 896) have priority over a Credit Elect offset. Only reverse one of these offsets in favor of a credit elect when a TC 826 offsets to the subsequent period, and penalties and interest will decrease if a timely credit elect posts

    Credit Elect Verses Credit Offset Decision Table

    If any of the following occurs: Then
    1. The subsequent tax period has a balance due 1. Delete the refund.
    2. The credit elect will cause penalties and interest assessed on the subsequent period to partially or fully abate 2. Retype the settlement notice or void the CP 145.
    3. Taxpayer claimed the credit on the subsequent tax period and the Credit Elect field on the subsequent module has a significant amount 3. Manually offset the Credit Elect.
    4. Otherwise 4. Allow the refund.

  9. When increasing tax or reversing credits on the notice module, reverse all or part of a notice cycle credit elect to cover the debit. Input CC ADC48 using TC 832/712 on IDRS.

    1. Delete any current cycle refund on the subsequent module. Reverse the offset using a posting delay code to allow time for the TC 841 to post before the TC 712.

    2. Do not reverse a credit elect that was offset in a different cycle than the notice cycle.

      Example:

      If the notice generated in cycle 200415 and the TC 836 posted in cycle 200408, do not reverse the TC 836.

    3. Retype the original notice to include the CP 145 pop-in paragraph. If a notice will not be mailed, create a CP 145 to tell the taxpayer of the reduced Credit Elect amount.

  10. If the Credit Elect from the prior year module (TC 716) was intended for another account, use CC ADD48 to transfer the payment with a TC 712/710:

    1. Use the TC 716 date as the TC 712 date

    2. Use the date the credit was originally available as the TC 710 date

  11. When manually transferring Credit Elect, input TC 830/710:

    1. Use the later of the Return Due Date (RDD) or the date of the credit creating the overpayment (except on timely credits), as the TC 830/710 date.

      Exception:

      For Form 1120, the TC 830/836 date is the RDD plus one month. For example: on a 200412 return the due date is 03152005 and the TC 830/836 date is 04152005.

      Note:

      Multiple TC 830's may need to be input depending on the date the credit is available. Always transfer the most recent credits first.

    2. If a tax adjustment or credit transfer creates, or is a part of the overpayment, time the offset (TC 830) to post after the adjustment or credit transfer, by inputting a Posting Delay Code (See Use of Posting Delay Codes Table).

      Note:

      Timing the actions will allow all of the transactions to post and will prevent unintentional refunds and unpostables. If the required overpayment amount is not available, the computer will resequence the TC 830 for one cycle. The exact amount of credit must be available or the TC 830 will unpost.

      Reminder:

      An adjustment notice will generate the same cycle as a penalty reversal if an FTD, FTF, FTP (decrease only) or ES penalty recomputes.

      Use of Posting Delay Codes

      If Then
      The penalty or interest will recompute because of an adjustment action

      Note:

      If penalties and interest will not recompute, the Posting Delay Code on the TC 830 is not required

      		 Use Posting Delay Codes to time the transactions to post in the following order:

      1. Adjustment or credit transfers and TC 290 .00 adjustments, if preventing an adjustment notice.

      2. The TC 830.

      3. The TC 571, if required.


      CAUTION:Check prior periods for debit modules before inputting the TC 830/710. If no "E" Freezes are present, manually offset applicable credit to the earliest debit module(s) before applying forward. Use TC 820/700 with CC ADD24. Time the transaction to post in the same cycle as the TC 830/710.
      A Doc Code 34 credit transfer will create the overpayment, use a Freeze Code 1 on the transfer

      1. Input TC 290 .00, Hold Code 4, Post Delay 1, if the adjustment notice must be suppressed. See Note below.

      2. Input TC 830/710, Doc Code 48, Post Delay 2 on the debit side of the transfer.

      3. Input a TC 571 using REQ77, Post Delay 3 (to post after the TC 830) if there is remaining credit that must refund
      A Doc Code 24 or 48 credit transfer will create the overpayment, use a TC 570 on the credit side of the transfer

      1. Input TC 290 .00, Hold Code 4 if the adjustment notice must be suppressed. See Note below.

      2. Input TC 830/710 with Doc Code 48, Post Delay 1 on the debit side.

      3. Input a TC 571 using REQ77, Post Delay 2 (to post after the TC 830) if there is remaining credit that should refund
      A Doc Code 54 adjustment will create the overpayment, use Hold Code 4 on the adjustment Input the TC 830/710 on a Doc Code 48, Post delay 1.

      Reminder:

      The TC 830 will release any remaining credit on the module when Hold Code 4 is used.

      Note:

      A Hold Code 2 or 4 can also be used to suppress the notice and used in place of the Hold Code 3 when preventing an adjustment notice resulting from a Doc Code 34 or 24 or 48 credit transfer input with TC 570. (The Hold Code 4 will not create a -K Freeze when input in the same cycle as the Doc Code 24, 34, or 48 credit transfer. TC 570 input on the credit side of the transfer is required to hold the credit).

    3. decide the correct notice disposition:

      Credit Elect of Notice Disposition

      If And Then
      The CP 145 or settlement notice with the Credit Elect pop-in paragraph will be mailed to the taxpayer Master File cannot systematically offset the additional Credit Elect 1. Manually transfer the Credit Elect (see above).
      2. Use label #7 to reflect the credit elect.
      Master File can systematically offset the additional Credit Elect 1. Let Master File offset the credit. Do not input a TC 830/710.
      2. Use Label #2. Allow the CP 147 to generate.
      All of the requested Credit Elect amount has now been applied A CP 145 generated Void the CP 145.
      A settlement notice generated with the Credit Elect pop-in paragraph Retype the notice to exclude the pop-in paragraph or void if returning to taxpayers original figures.
      The total Credit Elect applied is still less than the taxpayer's figures. A CP 145 generated Retype the CP 145.
      A settlement notice generated with the Credit Elect pop-in paragraph Retype the notice to correct the dollar amounts in the pop-in paragraph.

  12. Keep the following in mind when manually transferring Credit Elect:

    1. Use an Override-Date Indicator "2" on both sides of a Doc Code 48 if the debit and credit transaction dates are different

    2. Use the date of the credit being reversed as the reversal transaction date

    3. Do not transfer Credit Elect for an amount exceeding the available credit on the module

3.14.2.4.6.4.2  (01-01-2009)
Lump Sum Credit Offset—TC 826/706, 820/700

  1. Master File offsets available credit (with a TC 826/706) to an account on which a taxpayer has a balance due. A notice will generate to tell the taxpayer of the offset:

    Note:

    This offset to a debit account has priority over a requested Credit Elect except when an "-A" Freeze is present.

  2. CP 138 generates when an overpayment offsets to another tax liability.

  3. Use a Doc Code 24 credit transfer with a TC 701/821 to reverse an offset to a tax liability. Include a TC 570 on the credit side (TC 821) if the credit must be held. A Bypass Indicator is unnecessary.

    1. Make sure the reversal date matches the original offset date. Use CC BMFOLT to review a module that is not in the NRPS package or on IDRS.

      Caution:

      The TC 826 date may differ from the corresponding TC 706 date.

    2. Reverse multiple transactions in the order that the TC 826's appear on the module. Do not lump transactions together.

  4. If an adjustment will leave a balance due on a module:

    1. Reverse the offset:

      Offset Reversal Decision Table

      If Then
      There is a current cycle TC 826/706 offset Reverse it in whole or in part to satisfy the balance due. Do not reverse a prior cycle TC 826 unless timely credits are located to satisfy the account.
      The module that received the offset has a current cycle refund Delete the refund. Reverse the TC 826 using a Posting Delay Code to allow time for the TC 841 to post before the TC 821.

  5. Use CC ADD24 with a TC 731/851 to reverse offset interest (TC 736/ 856).

    Note:

    Use CC REQ54 with a TC 772 to reverse the TC 776. Use Hold Code 3 if needed.

  6. Void or retype the CP 138.

  7. When manually transferring offsets, input TC 820/700 on CC ADD24.

    1. Use the later of the Return Due Date (RDD) or the date of the credit creating the overpayment as the TC 820/700 date.

    2. Multiple TC 820's may need to be input depending on the date credit is available. Always transfer the most recent credits first.

3.14.2.4.6.5  (01-01-2009)
$10,000,000 Refunds

  1. An account with an overpayment of $10,000,000 or more requires that a manual refund be issued since a TC 846 will not generate. Before a refund of $10,000,00 or more can be issued, the account must reviewed by the Joint Committee, which is a Congressional Committee with Treasury and Chief Counsel liaisons. Any refund over $2 million must be reviewed by the Joint Committee covered under IRC Section 6408(a). A manual refund can not be issued until the Joint Committee gives its approval. Assign these cases the same day they are received in the unit unless local procedures dictate otherwise.

    Note:

    Refer to Document 6209 for release of the —X Freeze.

  2. Use current procedures for resolving deletes to work the case:

    1. Verify all unclaimed credits.

    2. Offset the overpayment as needed to cover any debit balances.

    3. Abate any interest caused by an overpayment not due the taxpayer.

    4. Monitor the case until all actions post to the Master File.

  3. The account must be satisfied or in debit status before closing the control. If another area has an open control on the case, contact that area, close the control, and route all available documents to that area.

    Exception:

    The control base may be closed if there is an "L" Freeze on the module and a Revenue Agent has advised that the credit not be refunded due to legal implications.

  4. If, after any adjustments, the account has a credit balance less than $10,000,000:

    1. Offset credit to any debit-balance modules.

    2. Prepare a manual refund for the excess credit.

    3. Monitor the case until the TC 840 posts.

  5. If, after any adjustments, the account has a credit balance of $10,000,000 or more, the Accounting Function must issue the manual refund:

    1. Prepare Form 3753.

    2. Send a copy of the original return, transcript, Form 3753, all prints essential to manual refunds, and any other documents about the case to the Accounting function.

    3. Monitor the case until the refund (TC 840) posts (6 to 10 weeks).

  6. Close the control base after all account transactions post.

  7. Keep photocopies of the return and the transcript on file for future reference.


More Internal Revenue Manual